Is Allison Transmission Holdings Inc (ALSN) Going to Burn These Hedge Funds?

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The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Allison Transmission Holdings Inc (NYSE:ALSN) from the perspective of those elite funds.

Hedge fund interest in Allison Transmission Holdings Inc (NYSE:ALSN) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Embraer SA (ADR) (NYSE:ERJ), Transocean LTD (NYSE:RIG), and EQT Midstream Partners LP (NYSE:EQM) to gather more data points.

Follow Allison Transmission Holdings Inc (NYSE:ALSN)

If you’d ask most shareholders, hedge funds are perceived as slow, old investment vehicles of yesteryear. While there are over 8000 funds trading today, Our researchers look at the masters of this club, approximately 700 funds. These money managers command bulk of all hedge funds’ total capital, and by tailing their first-class picks, Insider Monkey has formulated a number of investment strategies that have historically outstripped the market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a glance at the key action surrounding Allison Transmission Holdings Inc (NYSE:ALSN).

Hedge fund activity in Allison Transmission Holdings Inc (NYSE:ALSN)

At the end of September, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, flat over the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the biggest position in Allison Transmission Holdings Inc (NYSE:ALSN), worth close to $510.5 million, corresponding to 3% of its total 13F portfolio. On ValueAct Capital’s heels is D E Shaw, with a $270.9 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Farallon Capital, William Crowley, William Harker, and Stephen Blass’ Ashe Capital, and Jeffrey Gates’s Gates Capital Management.

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